Written by Lall(1996) Presented by Jun, Yoo-Duk

1. IT Knowledge Creation Opportunities by Joint Collaboration among APT Countries - Focused on Innovative Cluster Policy in Korea SQ 3.7 Written by Lall(1996) Presented by Jun, Yoo-Duk Rapporteur: Yooduk Jun(jyd@iita.re.kr)

2. Content • Introduction • Cluster and Technological Regimes • Study of Technological Innovation and Clusters in the developing Countries • Case Analysis of Mobile Communication Clusters in Korea • Conclusion and Policy Implications

3. Introduction • Since 1990s, the cluster-based policies for accelerating regional innovation and spreading developed technology have been experimented as successful strategies for nurturing and developing local industry and technology. • Recently, Korean government has implemented various cluster-based policies to activate local economy. However, it seems likely to degrade the efficiency of the national innovation system which was promoted to chase the developed countries due to the problem that the cluster policies have been only focused on creating physical infrastructures such as attracting the associated companies or establishing research institutions or supporting organizations.

4. Introduction of IT Cluster Policy Cluster theory OECD(2001), Porter(1998), Bok(2003) • Cluster Theory • to foster the local industry • to develop technology • Additional factors to affect innovative cluster • Innovation pattern of developing countries • Sectoral Characteristics ICT Innovative Cluster Latecomer’s innovation pattern Kim, L(1997), Song(2004) Sectoral Characteristics Breschi & Malerba(2000), Malerba, 2002

5. Cluster and Technological Regimes • Innovative Cluster concept by OECD Source : Compiled from Lee (2001)

6. Cluster and Technological Regimes Knowledge spatial boundaries T R Source Opportunity • Sectoral innovation system & Technological Regimes Knowledge Nature Appropriability Accessibility Cumulativeness Geographical distribution of innovators Learning process Orga. capacity Market feedback Knowledge base Agents Firms Non-Firms When the appropriability, opportunity and accumulativeness of technology are high, innovation leaders, especially industrial business groups, get together geographically, while they locate separately from each other when the same features are low, according to him. Institution Schumpeter petterns of innovation Source : Breschi (2000) Malerba (2002)

7. Study of Technological Innovation and Clusters in the developing Countries • Innovation Pattern of developing countries Technology transfer Technology transfer Innovation ratio Process innovation Product innovation Utterback & Abernathy(1994) Technology transfer Creation Upgrade Upgrade Acquisition assimilation assimilation Acquisition Time(reverse) Specific Phase (Retention) Fluid Phase (Variation) Transitional Phase (Selection) Kim, L.(1997)

8. Assumptions • The formation and evolution of clusters in Korea are assumed by means of the relationships of technology, the characteristics of technological changes • The formation and evolution of clusters in the developing Korea are assumed to be established by means of national innovation system and its inherent technological innovation patterns.

9. Case Analysis of Mobile Communication Clusters in Korea • R&D cluster for mobile communication MIC Institute of Information Technology Assessment (IITA) Policy Support Evaluation of Research Output Policy Suggestion Annual Project Plan Domestic joint Development Manufacturer System Development & Commercialization Support Mobile Telecomm- unication Carrier Technical Support Mobile Telecommunication Technology Research Lab. (ETRI) • LGIC • Samsung • - Hyundai • - Maxson - SKT - Shinsegi Telecom (94.7.) Research Fund Research Financial Support and Manpower Dispatch Parts & Technology Development Research Consignment Core Technology Offer Cooperation of ETRI Division Research Manpower Cooperation • Semiconductor Tech. Group • Switching Tech. Group • Information Tech. Group • Code Technology Department Cooperation Research with Qualcomm (U.S.A.) Source : J -Y Choung(2002)

10. Case Analysis of Mobile Communication Clusters in Korea Mobile phone patents Source : KIPO(1992~2000)

11. Case Analysis of Mobile Communication Clusters in Korea (Unit: Million won) • Regional Mobile industry production Source : KAIT(2003)

12. Case Analysis of Mobile Communication Clusters in Korea • LCD • Memory • Battery • Modem chip • Camera Module Hardware provider • Value Chains of Mobile Communication Clusters SKT, KTF, LGT Venture Firms Developer Telecommunication Service Manufacturer (Brand) Customer IP Test Contents Service Operator, TTA, Firms Venture Firms Software provider • Device controller: Memory, In/out • Modem controller • Middleware: WAP • OS: Brew, WIPI

13. Case Analysis of Mobile Communication Clusters in Korea Regional distribution of Mobile firms (Unit: No. of firm) Source : KOITA(2003)

14. Case Analysis of Mobile Communication Clusters in Korea Mobile Communication Cluster in Kumi Area ETRI <International> Intel IBM Venture firm1 R&D collaboration V2 V3 Spin-offs V4 V5 Yeungnam Univ. Incubating center V6 V7 CDMA Development partnership Local Gov. Joint Development Embedded Software R&D Collaboration Samsung Electronics R&D Collaboration IT CRC SME1 Gov. Kyungbuk National Univ. S2 S3 Kumi R&D center R&D collaboration S4 S5 Components suppliers Hub Firm Techno pole S6 S7 Samsung Suwon R&D center Core Components suppliers (Display, Camera module, battery) SDI, SEM

15. Conclusion and Policy Implications • Conclusions • Clusters evolve in compliance with the technology and technological changes • The formation and evolution of clusters in the developing Korea are established by means of national innovation system and its inherent technological innovation patterns • Policy Implications • there comes a necessity to investigate Korean style cluster model in terms of technology and technological changes rather than to follow the successful cases of the past